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ACCA F5: Decision-Making in Management Accounting - Make or Buy and Short-term Decisions Quiz

ACCA F5: Decision-making In Management Accounting - Make Or Buy And Short-term Decisions Quiz

Enhance your understanding of ACCA F5 with a focus on Make or Buy and other short-term decisions. This learning aid is designed to boost your skills in financial decision-making, emphasizing terms and definitions crucial for...

Questions: 14 | Attempts: 10 | Last updated: Aug 4, 2025

Sample Question 1
What are relevant costs?

Relevant costs include all costs incurred by the company in the past.

Relevant costs are historical expenditures related to the decision under consideration.

Relevant costs are fixed costs that do not change regardless of the decision made.

2 Relevant costs and revenues Relevant costs are future cash flows arising as a direct consequence of the decision under consideration

Sample Question 2
What are the three elements to relevant costs and revenues?

1) Historical costs and revenues. Past financial data is the most important factor in making decisions.

2) Fixed costs and revenues. Fixed costs are always relevant, and changes in fixed costs should be considered for decision making.

2 Relevant costs and revenues 1) Cash flows. Actual cash flows should be considered. Noncash items such as depreciation and interdivisional charges should be ignored. 2) Future costs and revenues. Past costs and revenues are only useful as a guide to the future. Costs already spent - sunk costs- are irrelevant for decision making. 3) Differential costs and revenues. Only the costs and revenues that alter as a result of a decision are relevant. Factors common to all alternatives being considered can be ignored? only the differences are relevant.

3) External costs and revenues. Only costs and revenues that are generated internally within a company are relevant.

Sample Question 3
What are the considerations for relevant costs and revenues in short-run and long-run situations?

1) Short-run situations do not require consideration of fixed costs. 2) Long-run situations do not involve any changes in fixed costs.

1) Marginal costing does not show sales, marginal cost, and contribution in the short-run. 2) Fixed costs do not change in the long-run.

2 Relevant costs and revenues 1) In many shortrun situations fixed costs remain constant for each alternatives being considered therefore marginal costing showing sales, marginal cost and contribution is particularly appropriate 2) Fixed costs do change and the differential costs must include any changes in the amount of fixed costs.

1) Fixed costs remain constant for each alternative being considered. 2) Differential costs remain the same in short-run and long-run situations.